Cerritos returns $10.1 million of redevelopment money to state

CERRITOS - Despite months of dispute by city officials, Cerritos has returned $10.1 million in unused redevelopment money to the state.

The successor agency to the Cerritos Redevelopment Agency issued a check to the Los Angeles County Auditor-Controller on Dec. 20, Mayor Jim Edwards said Tuesday. The amount was $7 million less than what the state had originally demanded.

In November, the city was told that it must return $17.1million, which city officials disputed and appealed, saying the money was allocated for Cuesta Villas, an affordable senior housing project.

"The City believes all of its actions were legal and appropriate," Edwards said in a statement in November.

Redevelopment agencies, which are funded by local property taxes, have been highly valued by California cities for decades as a tool to improve neighborhoods and attract businesses.

"The qualities that make Cerritos one of the best places to live in Southern California - a state-of-the-art police facility, award-winning parks, an exceptional senior center and a world-class performing arts center - were made possible by the Cerritos Redevelopment Agency," Edwards said Tuesday.

When California dissolved redevelopment agencies in 2011 in order to bolster state coffers, the law said any redevelopment funds that weren't allocated for projects or low- and moderate-income housing must be returned to the county. Those taxes would then be distributed to other local government agencies, including school districts.

The city hired an independent auditor in October to prepare a review of the successor agency to the Cerritos Redevelopment Agency, as required by law. The review said the city didn't have any money to return to the county and submitted the findings Oct. 15 to the state Department of Finance.

On Nov. 9, the Finance Department sent City Manager Art Gallucci a reply saying that $17.1 million had been transferred from the redevelopment agency to the city, which is against the law. The transfer took place Feb. 1, 2012, the same date redevelopment agencies were dissolved, state officials said.

According to California Finance Department spokesman H.D. Palmer, the department staff found the transaction record by reviewing the former redevelopment agency's balance sheet and the city's Comprehensive Annual Financial Report.

After a meeting between the entities in November, the Finance Department last month notified the city that it had revised its review.

The department said $7 million had already been expended by the RDA on enforceable obligations at an earlier date and reduced the amount due from the city to $10.1 million.

The city was holding the $10.1 million in reserve for the future Cuesta Villas senior housing development project, and the money was restricted for that purpose only, Edwards said.